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- Volkswagen and Guangzhou-based automaker XPeng plan to collaborate on two new EVs meant for the Chinese market, relying on XPeng's own platform, with the two expected in 2026.
- XPeng has achieved much in a short period of time in the sphere of EVs and autonomous tech since launching in 2014.
- Volkswagen is seeing increased competition from local automakers as well as Tesla in the field of EVs, as it enters a new era of its operations in China.
Volkswagen is the European automaker with the longest presence in China, having landed in the Middle Kingdom in 1983 with the Santana sedan. And for decades, the country has been one of its most important overseas markets, with VW establishing joint ventures with a number of automakers over the years.
In the era of electrification, VW produces two EV models unique to the Chinese market, under joint ventures with First Automotive Works (FAW) and Shanghai Automotive Industry Corporation (SAIC)—two of China's oldest automakers that have also collaborated with American automakers on several vehicles for the domestic market.
VW is now teaming up with automaker XPeng, taking a 4.99% stake in the company and investing $700 million in the process, with plans to develop two electric models scheduled to be launched in 2026. Their development will be overseen by a new entity called Volkswagen Group China Technology Company (VCTC), with over 2000 development and procurement experts slated to work on EVs.
The main difference to prior efforts will be that these VW-branded vehicles won't be based on Volkswagen's platforms. Instead, VW will use XPeng's own "Edward" architecture, which has underpinned its P7 and G9 models.
"Together with XPeng, we aim to put two additional fully connected electric vehicles on the road from early 2026 onwards, thus opening up new customer groups for the VW brand," said CEO VW Brand Region China, Stefan Mecha.
For the moment, the focus of these two new VW models will be on the Chinese market. But XPeng's export potential is something VW will be looking at down the road.
Guangzhou-based XPeng, launched in 2014, is a relatively small automaker by the country's standards, but the company has sought to take on larger automakers directly with the sleek and innovative vehicles, including the G9 crossover pictured above. The company has seen its share of early success among China's New Energy Vehicles, which include EVs and hybrids, and has also opened offices stateside.
XPeng is also well known in the field of autonomous vehicles, having developed its own systems instead of relying on outside developers. It is expected that VW will benefit from XPeng's expertise in this field in developing the two new models, amid increased competition with Tesla in China.
Audi, also part of the VW Group, plans to expand its cooperation with automaker SAIC, with the aim of extending its offerings in the premium segment.
"It is planned to start with electric models in a segment where Audi does not as yet have a presence in China," the automaker hinted.
The two agreements, revealed last week after months of rumors, work to cement VW's presence in a market that is rapidly changing, and one in which VW is not as dominant as it once was. For one thing, there are plenty of new Chinese brands on the market with EVs in their lineups, which was not the case a. decade ago. For another, European and American automakers have seen their market shares in China fluctuate wildly over the past decade as the public's taste has continued to evolve.
The VW Group has managed to weather these changes thanks to its dominant position in the market, which relied on midsize and executive cars for quite some time.
"The partnerships aim to swiftly expand the Group’s product range with further models from China for China in particularly promising customer and market segments," VW summed up the goals of the agreements.
The main takeaway is that the EV market in China has developed to a point where a foreign automaker like VW can launch several models entirely unique to that market, relying on Chinese automakers' platforms and technology instead of the other way around.
Will we see a Chinese automaker offer EVs stateside in this decade under its own brand, as had been promised for years, or is this unlikely at the moment? Let us know what you think.
Jay Ramey grew up around very strange European cars, and instead of seeking out something reliable and comfortable for his own personal use he has been drawn to the more adventurous side of the dependability spectrum. Despite being followed around by French cars for the past decade, he has somehow been able to avoid Citroën ownership, judging them too commonplace, and is currently looking at cars from the former Czechoslovakia. Jay has been with Autoweek since 2013.
